U.S. won't award tanker contract this year

Nov. 17, 2010 at 10:51 AM
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TOULOUSE, France, Nov. 17 (UPI) -- EADS North America Vice President Sam Adcock said the U.S. government will delay until next year the $40 billion contract to outfit the U.S. Air Force with refueling tanker aircraft.

A realistic contract award date for the 179 in-flight refueling tankers "is probably first quarter next year," Adcock said Tuesday at the company's investors' conference in Toulouse, France.

European Aeronautic Defense and Space Co., the parent of plane maker Airbus, is "very optimistic about" winning the deal over Seattle's Boeing, Adcock added.

The Air Force initially said it would award the contract in the fall and then before the end of this year.

Both companies filed bids in July, after the Air Force granted EADS a 60-day bidding extension because its American partner, Northrop Grumman, pulled out of the competition. The Los Angeles company left saying the bidding conditions clearly favor Boeing, a claim denied by U.S. officials.

The latest potential deadline extension underscores how fierce the competition has been over the past nine years. U.S. lawmakers have in the past argued against EADS, saying the contract should be awarded to Boeing to secure U.S. jobs.

"Let's face it: We're in the largest, most high-profile, most visible competition that has taken place in the United States in the defense and aerospace world in the last 10 years," Adcock said.

EADS is throwing its KC-45 tanker, a large plane based on the Airbus A330, into the race. The Americans are bidding with an altered version of its Boeing 767, called New Generation Tanker.

Boeing claims its tanker program will employ 50,000 Americans. EADS claims its plan will employ 48,000 Americans.

Adcock's remarks came less than a week after EADS reported third-quarter net profits of nearly $18 million, up from a $117 million loss during the same period a year ago.

"Earnings before interest and tax was driven by more favorable one-time effects at Airbus Commercial and Airbus Military as well as better performance at Cassidian, partially offset by higher R&D at Eurocopter," EADS said in a statement.

EADS Chief Executive Officer Louis Gallois warned, however, that the military business could experience volatility in the future.

"Budget reviews in our home countries are not yet fully completed; we therefore remain attentive to challenges which could arise for our business with government customers," Gallois said in a statement.

The company is expected to turn to emerging countries in Asia and Latin America for future growth, as military budgets in North America and Europe are under increasing pressure.

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